Tausi Insider

Indigenous investors are lining up to bid on Canadian pipelines TC Energy Corp. put up for auction this week as part of a $5-billion asset sale program. On Wednesday, TC Energy chief executive François Poirier outlined plans to sell several projects by the end of 2023 to help fund the Calgary-based company’s expansion, which is projected to cost $34-billion. Along with raising cash, he said streamlining one of North America’s largest pipeline operators would drive “simplicity of corporate structure and the impact on our ability to achieve our sustainability goals.” While Mr. Poirier steered clear of naming specific pipelines, analysts said two Alberta oil sands projects are candidates for sale. In a report, analyst Robert Hope at Scotiabank predicted TC Energy will sell its 50-per-cent stake in the 460-kilometre Grand Rapids pipeline, which connects refineries near Edmonton to oil sands properties north of Fort McMurray, and the 72-kilometre White Spruce pipeline, which feeds into Gr...

Finance Minister Paul Martin and Secretary of State for Financial Institutions Jim Peterson, right, in Ottawa on June 25, 1999. FRED CHARTRAND/CP Keldon Bester is a co-founder of the Canadian Anti-Monopoly Project and a fellow at the Centre for International Governance Innovation. Where is Paul Martin when you need him? In the late nineties, Canada’s banks had decided competition wasn’t for them. RBC and BMO announced their nuptials in January, 1998, and CIBC and TD followed suit in April of that year. Though the scale of RBC’s proposed purchase of HSBC is nowhere near that of the proposed consolidation in the nineties, regulators should learn from then-minister of finance Paul Martin and take a firm stance against Canada’s largest bank absorbing a competitor. The brazenness of the bank’s consolidation plans 20 years ago cannot be overstated. Canada would have gone from five major banks to two megabanks and a ticking clock on the future acquisition of their remaining competitors. B...

Canada’s biggest banks reported their fourth-quarter earnings this week, covering the three months ending Oct. 31, as analysts gauge the strength of the banking sector before heading into an expected slowdown (and possible recession) next year. Bank of Nova Scotia, Royal Bank of Canada and Toronto-Dominion Bank topped analysts’ forecasts. Meanwhile, National Bank, Canadian Imperial Bank of Commerce and Bank of Montreal fell short of analysts’ expectations. As central banks raise interest rates to slow inflation, economic fears have held bank stocks back compared with the overall market. Markets are watching these earnings closely for signs of how they will be affected in future quarters by decades-high inflation and central banks’ rapid rate hikes. Here’s a breakdown of the Big Six banks’ fourth-quarter earnings. Bank of Nova Scotia The Bank of Nova Scotia building, in Toronto, on Aug. 22, 2017. Nathan Denette/The Canadian Press Earnings Q4 2022 : $2.1 billion ($1.63 per share) Earni...

The federal government’s spending on COVID-19 support programs forced the Bank of Canada to aggressively raise interest rates, Bank of Nova Scotia economists say in a new report. Sean Kilpatrick/The Canadian Press Although the federal government’s spending on COVID-19 support programs has made only a small contribution to the run-up in inflation, it has forced the Bank of Canada to raise interest rates in a more aggressive fashion than would otherwise have been needed, Bank of Nova Scotia economists say in a new report. As Canada has grappled with the highest inflation rates in nearly four decades, there has been a great deal of debate about what is causing price growth, including the role that government spending has played. About half of the increase in core inflation beyond the Bank of Canada’s 2-per-cent target since the end of 2019 can be attributed to global factors, such as lofty U.S. inflation, changes in currency exchange rates and higher commodity prices, the Scotiabank rep...

CIBC reported a shrinking net interest margin, falling seven basis points quarter-over-quarter. Fred Lum/Tausi Insider Nine months into a supercharged cycle of interest rate hikes, Canada’s largest banks are starting to benefit from higher loan margins. Canadian Imperial Bank of Commerce CM-T, however, is not, and confusion over why the lender is such an outlier is hitting its share price. For years, Canada’s banks have stressed that rising interest rates would not be disastrous for their bottom lines. Although their blistering loan growth would likely slow, executives said the lenders could make more money off each individual loan. As rates rise, loan margins – or the amount made per loan – tend to increase. That scenario is now playing out for heavyweights such as Royal Bank of Canada RY-T and Toronto-Dominion Bank TD-N. The lenders reported net interest margins – a measure of the difference between what it costs a bank to borrow money and the rate at which it lends that money out ...

Lower expenses and higher revenue helped boost Laurentian Bank of Canada’s LB-T profits to $55.7 million for the fourth quarter. The Montreal-based bank said Friday the earnings worked out to $1.26 per share for the quarter ending Oct. 31, compared with a loss of $2.39 per share a year earlier when it took impairment and restructuring charges of $189.4 million or $3.40 per share. The charges last year were related to a strategic review of the bank’s operations and a writedown of its personal banking segment as the bank embarked on a turnaround plan that chief executive Rania Llewellyn said is going well. “I am extremely pleased that we exceeded all of our financial targets in this first year of our three-year strategic plan,” she said in a statement. Llewellyn said the results speak in part to the bank’s focus on cost discipline, with expenses down from last year when it took the charges, while adjusted non-interest expenses were up four per cent from last year but down two per cent ...

An oilsands mine facility seen from the air near Fort McMurray, on Sept. 19, 2011. Many communities across Canada, including Fort McMurray, are dealing with labour shortages that experts say are likely to get worse in the next few years due to this country's aging population. Jeff McIntosh/The Canadian Press When Dan Gallagher looks around his company, he sees a lot of retirement parties in his future. While it’s not something he formally tracks, the CEO of Mikisew Group – a Fort McMurray, Alta.-based company that specializes in oilsands site services, maintenance, logistics and construction – knows he’s got more employees approaching the end of their careers than just starting out. “I take a walk around our shop, and around our field services workforce, and I can clearly see that demographic. It’s aging,” Gallagher said. The implications of that make him nervous. Mikisew Group is already struggling with a shortage of labour, even recruiting as far away as Australia just to keep ...

An investigation conducted by Scotiabank found that some of its employees had inappropriately processed clients’ requests to switch their mutual fund holdings. Deborah Baic/Tausi Insider Bank of Nova Scotia’s BNS-T securities arm will pay $1-million in fines over allegations that dozens of employees engaged in improper sales practices, revealing the bank terminated more than 30 employees for “egregious misconduct.” The settlement deal with Canada’s mutual fund industry regulator, published on Wednesday, also requires Scotia Securities Inc. to return $10.8-million to clients. In Scotia’s agreement with the Mutual Fund Dealers Association, the investment dealer admits to not having adequate policies and procedures to prevent several incidents between 2017 and 2022 when employees padded their sales targets. Scotiabank’s investigation found that some employees inappropriately processed clients’ requests to switch their mutual fund holdings. Instead of processing the trades as switches, w...

Analysts expect CIBC to turn to public markets to raise funds to deal with a potential charge in a New York lawsuit and new, higher reserve requirements coming from the Office of the Superintendent of Financial Institutions. Evan Buhler/The Canadian Press Canada’s largest banks are under pressure to raise money after the country’s banking regulator raised capital requirements, with analysts predicting that Canadian Imperial Bank of Commerce CM-T will be the next of the Big Six banks to bolster its reserves. In early December, the Office of the Superintendent of Financial Institutions (OSFI) boosted the reserves that banks must hold, which prompted Bank of Montreal BMO-T to sell new shares for the second time this year. BMO raised a total of $3.35-billion in a share offering early this month, as it works toward closing one of the largest takeover deals on record by a Canadian bank. With CIBC facing a potential US$1-billion charge in a lawsuit with a New York hedge fund, analysts expec...

A majority new customers for Canadian banks are immigrants, eclipsing the growth from young adults growing up or customers switching institutions. Fred Lum/the Globe and Mail Competition is heating up among major banks to land new customers arriving from abroad, as Canada ramps up its immigration targets and a pending bank merger adds pressure to an already crowded banking market. The largest Canadian banks have spent years building and honing offerings for newcomers to Canada, as well as referral networks to reach them before they arrive. That’s for good reason: A large majority of banks’ new customers are immigrants, far eclipsing the growth that comes from young adults growing up, or established clients switching financial institutions. Canada set an annual immigration record in 2021, when it welcomed 405,000 new permanent residents. Now the country is opening its doors wider in an attempt to fuel economic growth, aiming to attract at least 500,000 newcomers annually by 2025. That...